Supply chains shaping business growth

Date : 31 October 2018

The shopping environment is changing rapidly, as is the external environment which affects our supply chains. This creates a significant opportunity for the supply chain function to develop new solutions, processes and consumer offerings.

IGD has been looking more closely at how organisations can capture this opportunity, and I’m pleased to share a summary of our findings with you. The full report will be available very soon – you can be the first to download it by registering your interest.

Creating new sources of growth

In most developed countries, business growth is getting harder to achieve – we can’t rely on growing populations or greater affluence. This means we have to be ever more creative:

  • Reinventing services to provide more choice, better experiences or greater convenience
  • Selling more premium products, for instance highlighting local or sustainable credentials
  • Personalising products or services to people’s needs and lifestyles
  • Whilst always reducing costs and waste by rethinking ways of working.

Capturing these new sources of growth will require a mindset that looks for opportunities rather than challenges. Our businesses will look for us to combine supply chain ingenuity and problem-solving skills with advanced technology and some eternal virtues.

Three key characteristics

Successful supply chains that operate as a key strategic driver within the business will be characterised by three major features in the coming years:

  1. Skill in applying disruptive technology
  2. Transparency and trust at the heart
  3. Fulfilment for the future

Skill in applying disruptive technology

The increasing speed of technological developments will continue to drive significant change, creating new routes to efficiency, collaboration and responsiveness. As ever-greater volumes of data are generated, the analytical tools that we use to gather insight and actions will be a crucial opportunity for competitive advantage. Much decision-making will become automated, but we must retain human judgement as an important input, especially as these tools will also bring the opportunity for trading partners to work together more effectively. And new operational technology will bring production closer to shoppers, for example in the form of more urban/vertical agriculture facilities.

VertiVegies grow products in Singapore that would otherwise have to be imported. Tiered growing maximises space, while sensors and controlled lighting optimises energy use.

Transparency and trust at the heart

Branding has always been an indicator of trust for shoppers to rely on. In the coming years, we will need to build on that to create new price premiums for our products. Shoppers are taking ethical factors into account when they make decisions, so leading businesses will look to gain trust by offering more precise information about product provenance, or sourcing and manufacturing methods. This increased visibility will create many side-benefits for supply chains, helping us prepare for a future of greater resource scarcity by radically reducing the amount of waste.

We expect that the drive towards greater sustainability will change the way we measure success. Sustainability metrics will come more to the forefront of companies’ reporting alongside financial KPIs, and as a result, it will be embedded in decision-making alongside traditional cost-benefit ratios.

Source: Supply Chains for Growth, IGD, 2018

Fulfilment for the future

Today, shoppers in some parts of China can receive a home delivery from Alibaba within 30 minutes of placing an order. And Amazon Prime, with its guarantee of faster delivery, has become a huge revenue generator. The race is on to set even higher standards of convenience.

Shoppers are increasingly combining online and offline shopping, and growing to expect seamless fulfilment. Retailers and manufacturers will gain great advantage through efficient, sustainable and responsive networks, delivering exceptional availability at speed and affordable cost. Large stores will continue to reduce selling space, creating room for automated online order picking, whilst convenience stores and other “hyper-local” delivery points allow for collection and top-up shopping, or onward delivery. We will continue to see a wide range of developments in the area of last-mile logistics as companies look to experiment and learn.

This is just a flavour of what is to come. When you read the report, you’ll find more examples to inspire, a range of proof points that you can use as you spread the information around your business, and ten key areas to focus on in preparing for this exciting new future for supply chains. We look forward to sharing it with you and receiving your feedback.

Alistair Balderson

Alistair Balderson

Head of Supply Chain Insight

The full report will be available very soon – you can be the first to download it by registering your interest.

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